Fire the board! Registrars attempt a coup at Nominet

The registrars are revolting — again — at Nominet.

Members representing 12.2% of the .uk registry’s voting rights have put their names to a call for five of the company’s unelected directors, including CEO Russell Haworth, to be fired and replaced with two hand-picked alternatives.

The plan is to shake up the company by slashing wholesale .uk prices and donating more money to worthy “public benefit” causes.

Nominet has warned in response that such a move would be “highly disruptive to our work and our team”.

The campaign, which can be found at PublicBenefit.uk, was kicked off by the registrar Krystal Hosting, which has about 45,000 .uk domains under management.

Signatories want to call an Extraordinary General Meeting that would vote on kicking out Haworth, along with chair Mark Wood, registry managing director Eleanor Bradley and directors Benjamin Hill and Jane Tozer.

Four elected non-exec directors and two non-elected directors would remain.

A second resolution would replace these directors with former BBC Trust chair Sir Michael Lyons and former RIPE NCC managing director Axel Pawlik, who have both confirmed their interest in the positions. Lyons would be chair.

Only 5% of Nominet’s voting rights — calculated largely from how many domains each member manages — are needed to call an EGM. At 12.2%, the campaign has already succeeded in passing that threshold. It would need 50%+1 of those attending the EGM to actually carry the resolutions.

The campaign claims that Nominet has gone downhill ever since Haworth was appoint five years ago.

It claims that the amount of money Nominet donates to “public benefit” causes has shrunk from £26 million ($35.5 million) in the preceding five years to £9.8 million in the five years since. That’s even while its wholesale prices for .uk domains increased 50% from £2.50 to £3.75 a year.

Director pay has gone up by 70% over the same period, it claims.

The registry also stands accused of frittering away money on acquisitions and pointless diversification into non-core businesses. Krystal founder Simon Blackler wrote:

This is not a VC-backed Silicon Valley startup that needs to take risks, make speculative acquisitions, “pivot” or worry about unnecessary diversifications. This is Nominet, the guardian of the .UK namespace and we’d like it back, please.

A second — and arguably more-important, if you’re a cynic — goal is to get the price of .uk domains to come down. This would reduce the carrying cost of portfolios held for resale by some Nominet members.

In response, Haworth has blogged that “an EGM and change of board at this time would be highly destabilising to Nominet and disrupt a range of fantastic programmes that are currently underway or planned”. He wrote:

I understand that there are frustrations and disagreements about how we run the business, and we are open to looking at those and making any adjustments that are in the interests of the company and the wider stakeholder community we serve. More on that to come.

The company has just approved a pricey multi-year investment in improving the registry infrastructure, he wrote.

The board has also approved a new Registry Advisory Council, which would be made up of members and have the ability to make recommendations on pricing, which could address concerns that Nominet has not been especially responsive to its members, he wrote.

Nominet came under fire last year when it unilaterally closed down the discussion forums on its web site, announcing and executing the move during its Annual General Meeting, saying posters had become “increasingly aggressive and hostile” towards Nominet staff.

At time of writing, 153 Nominet members, including four of the top 20 by .uk domain volume, have signed up to the campaign.

UPDATE: This article was updated 1248 UTC to correct the composition of the board and voting thresholds.

1 Comment Tagged: .uk, egm, krystal, nominet, publicbenefit.uk

.club back over a million names as Clubhouse drives growth

The .club gTLD’s zone file is back into seven figures as of last week, largely due no doubt to the increasing popularity of the new Clubhouse app.

As of yesterday, 1,005,145 domains could be found in the .club file, up from a recent low of 960,000 in early January.

The Clubhouse app, unaffiliated with .CLUB Domains, launched in April last year but started gathering mainstream media attention in mid-January, prompting a flurry of speculation in .club names. From what I gather, it’s an audio chatroom service.

It’s currently invitation-only, and only available on Apple’s iOS devices, which limits it reach. One assumes there could be upside potential for .club when the app fully opens up.

.club peaked at about 1.25 million domains in late 2019.

Comment Tagged: .club, .club domains, clubhouse

Eight years after asking, Israel to get its Hebrew ccTLD

Israel is likely to be awarded the Hebrew-script version of its ccTLD, at a meeting of ICANN’s board of directors next week.

ICANN is poised to approved ישראל. (the dot goes on the right, in accordance with Hebrew writing practice), which means “Israel”, on February 8.

The beneficiary will be not-for-profit ISOC-IL, which has been running .il for the last 25 years. The Latin-script version currently has just shy of 270,000 domains under management.

ISOC-IL first expressed its interest in an internationalized domain name ccTLD (pdf) in 2012, but only received final technical approval from ICANN last May.

The proposal appears to have been held up by government delays in selecting a registry operator — government approval is a requirement under ICANN’s increasingly inappropriately named IDN ccTLD “Fast Track” program, which began in 2009.

It’s debatable how much demand there is for Hebrew domains. There are fewer than 10 million speakers in the world and most are very familiar with the Latin script.

Verisign’s gTLD קום., a transliteration of .com, has fewer than 1,700 domains in its zone file today, and is on a downward trend, two years after launch. Most are registered via local registrar Domain The Net, which had planned to compete with ISOC-IL for the IDN contract.

Comment Tagged: cctlds, domain the net, fast track, hebrew, ICANN, idns, isoc-il, israel

Time is running out for Net4 as ICANN questions Indian court ruling

Struggling registrar Net 4 India has been hit with an unprecedented fourth concurrent breach-of-contract notice by ICANN, but an Indian court has ruled that ICANN should NOT terminate its accreditation.

It also turns out that Public Interest Registry wants to terminate its Registry-Registrar Agreement with Net4, after it failed to deposit about $22,000 in its account to cover renewal fees, putting 1,644 .org domains at risk.

The latest ICANN breach notice is much the same as the two delivered in December, both of which suggest that Net4 has been transferring its customers’ domains to a partner registrar, OpenProvider, without the registrants’ knowledge or consent.

They further suggest that Net4 has not enabled its customers to renew their domains or reclaim them after they’ve expired, and claim that the company has consistently refused to hand over records proving that its disputed transfers were legit.

Net4 also owes ICANN thousands in past due fees.

The company has been in quasi-judicial insolvency proceedings since 2017 over $28 million in unpaid bank loans that were acquired by a debt recovery agency called Edelweiss; its first breach notice came two years later when ICANN first learned of the case.

For some reason, ICANN did not terminate or suspend Net4’s contract back then.

With hindsight, this may have proven a bad move — during India’s first coronavirus lockdown last year, hundreds of Net4 customers started complaining about lost domains and non-existent customer service.

It was not until December last year that these complaints were escalated to the level of formal breach notices, and more threats to terminate its Registrar Accreditation Agreement.

Net4, in response, asked its insolvency court for a ruling preventing ICANN and PIR from terminating their respective agreements. It reckons it can get is house in order in the next five or six weeks.

ICANN presented what appears to be a wealth of evidence of the company’s misconduct and argued that the court has no jurisdiction over ICANN anyway, because the RAA is governed by California law and ICANN has no presence in India.

Nevertheless, the National Company Law Tribunal in New Delhi has ruled, in a virtually impenetrable word soup of a document (pdf) that reads like it was vomited up by a Victorian-era college freshman who’d just rolled up and smoked an entire legal dictionary, that ICANN and PIR should not “terminate these agreements at least until three months from hereof”.

That would stay Net4’s executive until April 25. The latest ICANN breach notice gives the company until February 19 to come back into compliance, though technically there’s nothing stopping it starting termination proceedings today based on past notices.

The orders given to ICANN and PIR are more “requests”, due to the fact that the court couldn’t decide whether its words had any jurisdictional power over either.

Rather hilariously, ICANN said in a press release late Friday:

When a registrar fails to allow registrants to renew, transfer, and manage their domain names, ICANN will not hesitate to take whatever actions are necessary, up to and including termination of the registrar, to protect registrants’ rights and interests.

These are words that ring hollow, given that it’s allowed Net4 to slide three times already and has been hesitating since June 2019.

Comment Tagged: .org, ICANN, insolvency, net 4 india, net4, pir

UNR getting out of the registry business with $17 million no-reserve auctions on 23 new gTLDs

UNR, the former Uniregistry, plans to auction off its portfolio of 23 new gTLD contracts in April.

The company, owned by domain investor Frank Schilling, said on a new web site at auction.link:

In a move to completely dedicate the company and its resources to its backend registry and IP rights protection services, UNR has announced that 23 of its Top Level Domain assets will be sold in no-reserve auctions on April 28, 2021.

The TLDs will be sold individually, rather than as a package.

While they’re all no-reserve auctions, the published starting prices add up to $16,870,000. Some have minimum bids of zero, some are less than the price UNR paid ICANN for its application fee back in 2012.

Here’s a list of the TLDs, along with their starting prices.

[table id=63 /]

The prices appear to be based on the reg fee and volume of existing registrations, which range wildly from around 300 for .hiv to 159,000 for .link. The .country gTLD, aimed at country music makers and fans, currently has no starting bid listed.

The most-likely buyers of these gTLDs would be the rapidly dwindling list of fellow portfolio registries, such as Donuts and Radix.

While UNR’s exit from the registry business may be surprising — Schilling was a big fan of new gTLDs and Uniregistry applied for 54 of them, investing $69 million — it’s merely the latest stage of the business being dismantled.

Uniregistry sold its registrar and secondary market businesses to GoDaddy last year, and later sold its stake in three car-related gTLDs to business partner XYZ.com.

UNR said the April auctions will be managed over one day by Innovative Auctions, which is pretty much the de facto standard player in new gTLD auctions.

While the company says the auctions are open to “businesses and individuals”, I’m pretty sure ICANN rules forbid a gTLD being owned by individuals.

The company now plans to focus on being a pure-play back-end registry services provider, with a focus on dot-brand gTLDs, where it will continue to compete with the likes of GoDaddy, CentralNic, Donuts and Verisign.

2 Comments Tagged: auctions, innovative auctions, new gTLDs, uniregistry, unr

Amid .club boom, one AV vendor is blocking the whole damn TLD

.club may be experiencing a mini-boom in sales due to the popular new Clubhouse app, but one antivirus vendor has reportedly decided to block the entire TLD.

According to Forbes, the free MalwareBytes Browser Guard plug-in will warn users attempting to visit .club sites that it’s a “suspicious top-level domain”, adding that .club is “frequently used by scam or phishing sites, but can be used by legitimate websites as well”.

Users can click through to dismiss the warning and visit the site if they choose.

It seems a lot like overkill or an algorithmic glitch to me — .club has never been a particularly malware-friendly TLD. According to SpamHaus, only 0.9% of the .club domains that it’s seen in the wild could be considered “bad”.

After a disappointing second half of 2020, which saw about 300,000 domains disappear from its zone file, .club has seen a bit of a recovery in the last two weeks, largely due to a popular new audio social media app called Clubhouse.

Since the app started getting media attention earlier this month, .club has become the latest TLD hit by domain investor speculation with .CLUB Domains CEO Colin Campbell describing sales on January 15 as “absolute pandemonium”.

While .club has added about 30,000 domains to its zone since then, it’s not yet enough to counteract last year’s decline in volume. Luckily for .CLUB, many of its sales have been of premium-priced names.

It’s unlikely that these latest registrations are related to the MalwareBytes block.

Comment Tagged: .club, .club domains, clubhouse, malwarebytes, new gTLDs, security

New rules could stop registries ripping off big brands

New gTLD registries could be banned from unfairly reaching into the deep pockets of famous brands, under proposed rules soon to be considered by ICANN.

A recommendation approved by the GNSO Council last Thursday targets practices such as using reserved and premium lists to block trademark owners from registering their brands during sunrise periods, or charging them exorbitant fees.

It’s believed to target new TLDs that hope to copy controversial practices deployed by the likes of .sucks, .feedback and .top in the 2012 gTLD round.

The recommendations came in the final report of Review of All Rights Protection Mechanisms (RPMs) in All gTLDs working group, which suggests over 30 tweaks to policies such as Sunrise, Trademark Claims, Trademark Clearinghouse and Uniform Rapid Suspension.

While the recommendations almost all received full consensus of the working group, that’s largely because the group could not agree to any of the major changes that had been demanded by the intellectual property lobby.

The aforementioned RPMs will therefore not change a great deal for the next batch of new gTLD applicants.

Even the recommendation about not ripping off big brands is fairly weak, and may well be watered down to homeopathic levels by the forthcoming Implementation Review Team, which will be tasked with turning policy into practice.

This is the recommendation:

Sunrise Final Recommendation #1

The Working Group recommends that the Registry Agreement for future new gTLDs include a provision stating that a Registry Operator shall not operate its TLD in such a way as to have the effect of intentionally circumventing the mandatory RPMs imposed by ICANN or restricting brand owners’ reasonable use of the Sunrise RPM.

Implementation Guidance:

The Working Group agrees that this recommendation and its implementation are not intended to preclude or restrict a Registry Operator’s legitimate business practices that are otherwise compliant with ICANN policies and procedures.

The idea is that ICANN Compliance could come down on registries deploying unfair rules designed to rip off trademark owners.

Practices that have come in for criticism in the past, and are cited in the report, include:

.top’s attempt to charge Facebook $30,000 for facebook.top

.feedback registering thousands of brand-match domains to itself

.sucks placing brand-match domains in an expensive premium pricing tier

Famous Four Media doing the same thing

The working group could not agree on whether any of these should be banned, and it looks like the IRT will have a lot of wriggle room when it comes to interpret the recommendation.

Now that the GNSO Council has approved the RPM working group’s final report (pdf), it will be passed to the ICANN board of directors for consideration before the nitty-gritty work of translating words into reality begins.

Comment Tagged: .feedback, .top, gnso, ICANN, pdp, rpms, sucks, sunrise, trademarks

MMX vows to refocus under new boss after crappy 2020

MMX says it plans to refocus its business on higher-margin products after a 2020 marred by plummeting registrations, product delays and financial irregularities that led to senior management being oustered.

The new gTLD registry also revealed that it laid off 20% of its staff in a “right-sizing” exercise last year. Due to its modest size, this means about four or five people lost their jobs.

The company said today that acting CEO Tony Farrow has been confirmed for the job full-time, and that he will join the board of directors after regulatory checks.

Farrow took over last October, when CEO Toby Hall and CFO Michael Salazar were both ejected after admitting to over-stating MMX’s revenue and profit in 2019.

Now, Farrow says MMX will spend 2021 focusing on “quality” regs — those with a higher chance of renewing or with higher-margin reg fees — and on its AdultBlock services, which block trademarks and typos across its four porn-themed gTLDs.

Overall domains under management declined 19% in 2020, which appears to be almost entirely down to .vip, a cheap gTLD that initially performed strongly with Chinese speculators, losing about half a million names.

AdultBlock, which covers the old ICM Registry portfolio, launched at the end of 2019 with a high price tag and a couple bulk sales, but stalled during 2020. MMX blames this for a 3% decline in overall billings last year.

The company also hinted that it may try to offload some of its crappier gTLDs, saying:

The new executive team is also reviewing the contribution received from each of its TLDs and the growth prospects for each from new sales initiatives to ensure the carrying values associated with each TLD is appropriate going forward.

Farrow said in a news release:

Our FY 2021 plan will focus on AdultBlock sales, extensive release of inventory to the market, quality registrations with the view of future renewal revenue and standardized promotions for our channel partners. It is a straightforward business where focus must remain on the quality of our domain registrations and promotions with our channel partners. We lost some of the momentum after the initial launch of AdultBlock in FY 2019. However, FY 2021 was always the target year for the full rollout of this new product, and I am encouraged by the dialogue with our channel partners to really move AdultBlock in FY 2021.

AdultBlock, which sets trademark-match domains aside as non-resolving reserved names, launched with a price tag of between $349 and $799 per trademark per year.

MMX separately announced today that it is paying ICM Registry’s investors, primarily founder Stuart Lawley, over alleged (and denied) breaches of unspecified warranties made at the time of the acquisition in May 2018.

Farrow was COO of ICM from the 2011 launch of .xxx until the MMX acquisition.

3 Comments Tagged: .vip, adultblock, earnings, financials, layoffs, mmx, new gTLDs, revenue

Failed .org buyer Ethos Capital buys Donuts

Donuts is to be acquired by Ethos Capital, the private equity company that tried and failed to buy .org manager Public Interest Registry a year ago.

Donuts tells me that Ethos is to purchase the controlling interest in the company from Abry Partners, which acquired Donuts two years ago.

The value of the deal, which comes hot on the heels of Donuts’ acquisition of Afilias, was not disclosed.

It also confirmed that former ICANN CEO Fadi Chehadé, who used to work for Abry, is co-CEO of Ethos along with founder Erik Brooks.

Donuts is of course headed by Akram Atallah, who used to be Chehadé’s number two at ICANN.

Given Ethos’ proposed acquisition of PIR was rejected by ICANN due to .org’s unique circumstances as a legacy non-profit concern, it strikes me as unlikely this deal will face the same degree of regulatory scrutiny, though Chehadé’s involvement may raise eyebrows.

The company holds the largest portfolio of gTLDs, with about 260 owned-and-operated strings and contracts to back-end a couple hundred more.

2 Comments

Crackdown looms for new gTLD auction gaming

ICANN will be urged to consider taking a stronger position against companies who apply for new gTLDs simply to lose them at auction or immediately flip them to others.

A community working group, known as SubPro and tasked with developing rules for the next new gTLD round, delivered its final Final Report this week, and the one area that failed to gain a designation of “consensus” or stronger was private auctions.

In the 2012 application round, several companies applied for large portfolios of strings that look — in hindsight at least — like efforts to game the system by forcing rivals to auctions they planned to deliberately use.

Companies such as MMX made millions losing auctions during the round, some of which was reinvested in winning auctions for other TLDs.

Applicant Nu Dot Co was notable for losing every private auction it participated in, then quickly flipping its successful .web application when Verisign stepped up with a $135 million bankroll.

While it’s difficult to know the extent to which this was all planned in advance, it proved the business model — filing spurious applications for new gTLDs you have no intention of launching — could be lucrative in future rounds.

But SubPro has put forward a slew of recommendations that, should they pass the remaining hurdles of the policy development track, could bring in substantial sanctions for those applicants and registries found to be gaming the system.

The SubPro recommendations are heavily buttressed with square parentheses, indicating disputed text, and supplemented by some minority statements from members of the working group who think that private auctions should be banned outright in future application rounds.

But the headline recommendation, numbered 35.3, is this:

Applications must be submitted with a bona fide (“good faith”) intention to operate the gTLD. Applicants must affirmatively attest to a bona fide intention to operate the gTLD clause for all applications that they submit.

Far from merely providing a check-box assertion that they’re legit, which would itself be easily gamed, applicants would also find their applications scrutinized by ICANN and its external evaluators to check for signs of a lack of bona fides.

Factors used to determine shadiness could include how many applications for contested strings are applied for, how many private auctions are lost, whether the successful applicant has not launched its gTLD within two years, and whether contracts are flipped within the first year.

SubPro discussed penalties for gaming could include the loss of registry contracts, a ban from future rounds or straight-up monetary fines. But the group did not put forward any recommendations.

SubPro couldn’t seem to come to agreement on most of this. The recommendations were determined to have “strong support but significant opposition” during the group’s recent consensus call.

One strong objection came from a somewhat diverse group of SubPro participants comprising Alan Greenberg (At-Large), Christopher Wilkinson (At-Large), Elaine Pruis (Verisign), George Sadowsky (Afilias/ISOC), Jessica Hooper (Verisign), Jim Prendergast (consultant), Jorge Cancio (Swiss government, but signed in a personal capacity) and Kathryn Kleiman (non-commercial users). They said:

The recommendations in the final report are a mix of overly complex disclosures and attestations that needlessly complicate the program to allow for private auctions. And they will not work. The only way to prevent a repeat of the activity from the 2012 round is to ban private auctions

They also claimed that allowing private auctions would putter smaller, niche and community applicants at a disadvantage, and that ICANN’s reputation would be harmed if it was seen to be overseeing gaming.

The At-Large Advisory Committee also issued a strong objection to private auctions along the same lines:

We remain concerned about attempts to “game” the application process through use of private auction and share the ICANN Board’s concerns on the consequences of shuffling of funds between private auctions. The ability for a loser to apply proceeds from one private auction to fund their other private auctions only really benefits incumbent registry operators or multiple-string applicants and clearly disadvantages single-TLD/niche applicants. We believe there should be a ban on private auctions, and that by mandating ICANN only auctions, the proceeds of ICANN auction can be directed for uses in public interest

The assumption there of course is that an ICANN “last resort” auction, in which the winning bid is funneled into ICANN’s cash pile, would be spent on stuff genuinely in the public interest, rather than frittered away on secretly settling employee lawsuits or indulging in more expensive, self-important navel-gazing.

Perhaps unsurprisingly, the ICANN board of directors has indicated that it prefers the idea of last resort auctions to private auctions.

But SubPro has also made some recommendations that could potentially keep the price of last-resort bids down, completely redesigning the auction process compared to the 2012 round.

If the recommendations are implemented, applicants would have to submit bids towards the start of the application process, when they don’t even know who they’re bidding against.

After all the applications have been submitted, ICANN evaluators would group them all according to whether they’re identical or confusingly similar to each other, then inform each applicant in a contention set how many bidders — but not their identities — they’re up against.

Applicants would then have to submit a sealed bid stating the maximum price they’d be willing to pay for the gTLD in question. It would be only after “reveal day”, when ICANN publishes the applications themselves, that everyone would learn who they’re bidding against.

They’d then be able to engage in private resolutions (auctions could come into play at this point), but it would only be after contention resolution phases such as objections and Community Priority Evaluations were complete that applicants would find out who’d submitted the highest bid.

The winning bidder would pay the amount of the second-highest bid to ICANN.

The 400-page final report (pdf), along with the minority statements, will now be sent to the GNSO Council for approval, before it makes its way to the ICANN board.

Given how much work remains to be done on private auctions and other issues that I’ll get to in later coverage, it seems that a lot of the mechanics of how contention resolution will work will have to be devised by ICANN and the community during the Implementation Review Team and Operation Design Phase phases, along with at least one round of commentary on at least one edition of the next Applicant Guidebook.

The next round of new gTLDs has moved a step closer, but it’s still going to be well over a decade after the last application window before we see the next one.

Comment Tagged: auctions, contention, gaming, ICANN, last resort, new gTLDs, private auctions